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FERC takes steps to ensure service continuity on the Southeast Markets Pipeline Project

The Federal Energy Regulatory Commission (FERC) has recently taken important steps to permit the Southeast Market Pipelines Project (Project) to continue to provide service without interruption following last summer’s decision by the D.C. Circuit to vacate FERC’s orders authorizing the Project’s construction and operation. FERC issued an updated Environmental Impact Statement on February 5, 2018, concluding that while the Project will lead to increased greenhouse gas (GHG) emissions, the Project will not have a significant effect on the environment. On February 6, 2018, FERC asked the D.C. Circuit to delay issuing the mandate of its earlier order for 45 days to provide FERC adequate time to issue an order on remand. The filing of the motion is likely to delay the court’s issuance of the mandate while the court considers the merits of the motion.

The Project is made up of three separate, but inter-related interstate natural gas pipeline projects: the Transcontinental Gas Pipe Line Company Hillabee project, the Sabal Trail Transmission LLC project, and the Florida Southeast Connection LLC project. The Project consists of approximately 685 miles of pipeline and appurtenant facilities and is designed to deliver natural gas to Florida. In large part, the natural gas will be used to generate electricity for Florida consumers. FERC issued orders granting certificates of public convenience and necessity authorizing the Project sponsors to construct and operate the Project facilities in 2016. The Sierra Club, among other parties, sought judicial review of FERC’s orders certificating the Project.

While judicial review was pending, certain portions of the Project were constructed and placed into service. Other portions are due to be placed into service in the near future.

On August 22, 2017, a divided D.C. Circuit panel issued an order finding that FERC’s orders granting certificates of public convenience and necessity for the Project failed to adequately consider the indirect effects of downstream GHG emissions that may result from the Project’s operation under the National Environmental Policy Act (NEPA).1 As a result, the court vacated FERC’s certificate orders and remanded the proceeding to FERC for further environmental analysis. The Sierra Club opinion states that the court will not issue the mandate in that docket until seven days following court action on any petitions for rehearing or rehearing en banc. On January 31, 2018, the D.C. Circuit denied rehearing and rehearing en banc; therefore, the court could have issued the mandate on February 7, 2018. If the mandate had been issued, the Project sponsors would no longer have been able to continue construction of the pipeline or to provide service over those portions of the Project that have already been constructed and placed in service.

This ruling adds to a growing body of case law requiring that federal agencies must meaningfully consider GHG emission impacts of their policy decisions, even in the absence of executive branch emphasis on the issue.2 It is becoming increasingly clear that courts are requiring thorough and robust consideration of climate impacts under NEPA.

In compliance with the remand order, FERC issued a revised Final Environmental Impact Statement for the Project on February 5, 2018 (the Revised FEIS). While the Revised FEIS was supposed to address the indirect effects of downstream GHG emissions that may result from the Project’s operation, the Revised FEIS admits that FERC staff “cannot identify a suitable method to attribute discrete environmental effects to the quantified downstream emissions.”3 However, the Revised FEIS addresses a number of GHG issues. For example, the Revised FEIS notes that a number of coal- and oil-fired generation units in Florida are due to be retired, and those units will be replaced, in large part, by gas-fired and solar facilities. The Project will increase the deliverability of gas to Florida by 1.1 bcf. The Revised FEIS estimates that GHG emissions in Florida will increase by between 3.6 and 9.9 percent due to the Project. The Revised FEIS states that, if the Project is not constructed, Florida may still experience increased GHG emissions because of the need for increased generation resources in the state. Thus, the Revised FEIS concludes that the Project will not have a significant effect on the environment. It remains to be seen whether this Revised FEIS is enough to satisfy the court’s concern regarding lack of analysis of indirect effects of downstream GHG emissions that may result from the Project’s operation.

On February 6, 2018, FERC submitted its motion seeking a 45-day stay in the issuance of the mandate in Sierra Club. FERC’s motion states that it plans to issue an order on remand within 45 days and that a failure to stay issuance of the mandate will “cease the operation of needed natural gas pipelines, potentially endangering the supply of electricity to Florida residents.”4 The motion indicates that the Sierra Club opposes the request for a stay. The Sierra Club has up to 10 days to file an answer to the motion, and in the meantime, it seems likely that the D.C. Circuit will delay issuing the mandate pending consideration of the motion on the merits.

Sierra Club, et al. v. FERC, 867 F.3d 1357 (D.C. Cir. 2017)

On September 15, 2017, the Tenth Circuit held that the U.S. Bureau of Land Management (BLM) failed to properly analyze GHG emissions when approving lease extensions for four Wyoming coal mines. Reversing a lower court ruling that upheld the leases, a three-judge circuit panel said that BLM failed to justify its conclusions that extending the leases would not have an effect on the country’s overall coal consumption. WildEarth Guardians et al. v. Bureau of Land Management, Case No. 15-8109 (10th Cir. 2017).